ISM Manufacturing Index

ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved down -0.5% (m/m) to 48.7 for May 2024; this value is weaker than the forecast of 50. The new orders sub-index scored at 45.4. The reading showed another contraction for the manufacturing activity as demand was soft again, output was stable, and inputs stayed accommodative.

The ISM manufacturing index is based on surveys of 300 purchasing managers in 17 industries. The survey is a diffusion index calculated as a percent of responses. A value of 50 is neutral, while less than 50 denotes contracting manufacturing activity and greater than 50 denotes expanding activity.

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Figure 1 breaks down the composite index and sub-indexes. The backlogs sub-index was 42.4 this month, while the inventories sub-index was 47.9.

The seven manufacturing industries reporting growth in May — in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Paper Products; Textile Mills; Primary Metals; Fabricated Metal Products; and Chemical Products. The seven industries reporting contraction in May — in the following order — are: Wood Products; Plastics & Rubber Products; Machinery; Computer & Electronic Products; Furniture & Related Products; Transportation Equipment; and Food, Beverage & Tobacco Products.

“General concern about overall industry economics. Pricing weakness continues, and we anticipate more headwinds in the coming months for spot orders and inflation. Contract order book remains steady.” [Primary Metals]

At ˽av, we closely monitor the ISM manufacturing index since it is an excellent barometer of the present strength, as well as a window on the likely short-run future, of U.S. manufacturing.

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